2012 AMP Proposed Rule: BIO's Comments on the Centers for Medicare and Medicaid Services’ Proposed Rule regarding covered outpatient drugs under the Medicaid Program

Re:      CMS-2345-P (Proposed Rule, Medicaid Program; Covered Outpatient Drugs)

Dear Ms. Tavenner:

The Biotechnology Industry Organization (“BIO”) is pleased to submit the following comments to the Centers for Medicare and Medicaid Services’ (“CMS”) Proposed Rule regarding covered outpatient drugs under the Medicaid Program, which was published in the Federal Register on February 2, 2012 (the “Proposed Rule”).[1]  The Proposed Rule represents rulemaking to implement changes enacted by the Patient Protection and Affordable Care Act of 2010 (“ACA”).[2]  BIO is the largest trade organization to serve and represent the biotechnology industry in the United States and around the globe.  BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers, and related organizations in the United States.  BIO members are involved in the research and development of health care, agricultural, industrial, and environmental biotechnology products.

As the representative of an industry that is devoted to improving health care through the discovery of new therapies, BIO understands the importance of the Medicaid drug rebate program (the “Program”). The Program ensures that Medicaid is able to provide affordable drugs and therapies to low-income and other needy populations, and the ACA, with its wide-ranging revisions to the healthcare system, includes a number of provisions impacting the operation of the Program.  BIO appreciates CMS’ effort through the Proposed Rule not only to bring additional clarity to those ACA provisions, but also to address through regulation a number of additional topics not previously included in regulation but nevertheless of significance to Program operation and integrity. The resulting Proposed Rule represents a comprehensive overhaul of the existing regulation that governs the Program, and includes wholesale revisions to the calculation of Average Manufacturer Price (“AMP”), conforming revisions to and clarifications of the calculation of Best Price (“BP”), revisions to the rebate formulas, and extensive requirements governing reimbursement rates for drugs.  Final implementation will significantly impact patient access to drugs and biologicals, and BIO urges CMS to provide the additional guidance and clarity described below to ensure continued beneficiary access to important drug and biological therapies.

The comprehensive nature of the Proposed Rule means that BIO’s comments are correspondingly extensive as well.  The Proposed Rule goes well beyond the provisions of the ACA to address multiple aspects of the Program.  We support CMS’ efforts to ensure that clear and comprehensive regulatory standards exist for this Program and appreciate the efforts CMS has made in the Proposed Rule to support that result.  Certain aspects of the Proposed Rule, however, would impose requirements that are impractical and, coming 20 years into the Program, nearly impossible to implement. 

The purpose of the rulemaking process is to ensure CMS is made aware of the legal, policy, and operational implications of its proposals.  We provide that feedback below from the perspective of the manufacturers that generate the pricing data and pay the rebates upon which the entire Program relies.  CMS’ proposals to abandon the “presumed inclusion” approach to the AMP calculation and to expand the Program to the Territories are two issues that BIO strongly opposes, in part based on the immense operational burdens those changes would create.  BIO also opposes CMS’ effort to expand the line extension alternative rebate formula well beyond the limited scope provided by statute.  There are many aspects of the Proposed Rule that BIO does support as well, including CMS’ retention of the substantive bona fide service definition and clarification of the Best Price definition and patient transactions.  It is very clear that CMS expended enormous effort in generating what can only be called a complete overhaul of the Medicaid rebate regulations.  While BIO does not support all of those changes, we commend CMS for the effort it has made to provide all stakeholders with clear standards for compliance. 

[1]Medicaid Program; Covered Outpatient Drugs, 77 Fed. Reg. 5318 (Feb. 2, 2012) (42 C.F.R. pt. 447)

[2]As used in these comments, the abbreviation “ACA” shall refer collectively to the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, the Medicare and Medicaid Extenders Act of 2010, the Education, Jobs, and Medicaid Funding Act of 2010, and other subsequent legislation.